Chapter 9, Problem 9.22E

Throughput costing (continuation of 9-21). The variable manufacturing costs per unit of Nascar Motors are as follows:

1. 1. Prepare income statements for Nascar Motors in April and May 2017 under throughput costing.

Required

1. 2. Contrast the results in requirement 1 with those in requirement 1 of Exercise 9-21.
2. 3. Give one motivation for Nascar Motors to adopt throughput costing.

Exercise 9-21

9-21 Variable and absorption costing, explaining operating-income differences. Nascar Motors assembles and sells motor vehicles and uses standard costing. Actual data relating to April and May 2017 are as follows:

The selling price per vehicle is $24,000. The budgeted level of production used to calculate the budgeted fixed manufacturing cost per unit is 500 units. There are no price, efficiency, or spending variances. Any production-volume variance is written off to cost of goods sold in the month in which it occurs.

1. 1. Prepare April and May 2017 income statements for Nascar Motors under (a) variable costing and (b) absorption costing.